It's completely absurd on its face. If cutting taxes somehow led to job creation, Mississippi would be an economic powerhouse, and the George Bush tax cuts would have brought prosperity instead of two recessions.

But despite its obvious failures, the Underpants Gnome economic theory has been the Republican party line for nearly four decades. Even worse, it has somehow become the conventional wisdom among the Very Serious People of the political chattering class. That's why it was great to hear Governor Dayton not only forcefully pushing back on this nonsense in his State of the State address, but making the case that his budget would actually improve our business climate:

I want Minnesota to provide the best jobs for our citizens, the best lives for their families, and the best environment for our businesses to provide those jobs.

Those who measure "business climate" only by tax rankings will question my strategy... However, Minnesota has not been considered a "low tax" state during my almost four decades of public service. And the facts show that states offering businesses and their top executives the lowest taxes usually offer the rest of their citizens the lowest incomes, the fewest public services, and the highest crime rates....

I have a respectful, but strong, disagreement with some of the other elected officials here tonight, about the value of public investments in, and incentives for, economic growth. My father and uncles taught me the paramount importance of continuous private and public investments in improving the communities in which people work and live. (Dayton's prepared remarks, emphasis added)

Low taxes for CEOs aren't a sufficient incentive to start or expand a business; trickle-down economics just doesn't work. What does work is having a well-educated workforce, excellent public infrastructure, a great quality of life, and a prosperous population that can afford to buy businesses' goods. That's a much better way to improve our business climate than racing other states to the bottom.

Trickle-down economics has failed. It's time for us to abandon the Underpants Gnome economic theory and get proactive about improving our business climate for real.